Article

Stephan Visarius
Stephan Visarius 18 December 2017

The future is "human" retail - seven steps to 1:1 relationships

Customers expect a digitally-supported shopping experience, yet retailers struggle to provide it. These 7 disruptive trends will affect the future of retail.

To put it simply, today’s trends are tomorrow's normal. For now, though, real customer centricity and true 1:1 relationships between customers and retailers are still wishful thinking. Very few retailers use all available tools and technologies to put the customer at the center of all their thinking and acting. 

It is no surprise that the world's leading online retailer Amazon is again rocking the market. As Jeff Bezos stated in his 2016 Shareholder Letter, “There are many ways to center a business... obsessive customer focus is by far the most protective of Day 1 vitality…”. And if nothing else, the acquisition of Whole Foods along with the launch of Amazon Fresh in Europe is a harsh wake-up call for the whole retail industry.  

Technology does understand you

While customers have come to expect a digitally-supported shopping experience, retailers often struggle to provide it. Truly focusing on your customers today is more than selling the right products. The customer experience is important, the senses must be engaged, and retailers need to communicate in appealing ways on all channels. Digitization and computerization are pushing the existing “one-to-all” retail world into a new era of “one-to-one” human retail. 

In this new era, intelligent technology and human emotions are working together to drive business success. Some may still doubt that technology can understand human needs, but everyday reality is proving them wrong. Chatbots accommodate your requests when you complain about something, smart algorithms find the best price for your transatlantic flight, and IBM's Watson supercomputer is learning to diagnose cancer and make treatment recommendations in a fraction of the time doctors normally require. 

It’s all about the interconnection  

Technologies at the POS will understand and shape the customer’s buying behavior, will play a bigger role both in warehousing and logistics, and will influence trading up, cross-selling and upselling. Distribution channels will merge, borders between stores, web and mobile will dissolve. Whether it’s eCommerce, mCommerce or store-shopping, it will always be about interconnection of all channels. 

A future customer will expect his needs to be satisfied right away. To meet this expectation, he will reveal his buying behavior along with insights on what he likes, wants, and needs. As soon as he enters a store – online or offline – the sales person (or artificial shopping assistant) will know a lot about his habits and preferences, even before saying “Hello Mr. Meiers, how are you doing today?”

Seven disruptive trends

Retail nowadays is driven by digital- and tech-trends. Possible applications of artificial intelligence characterize the current discussion. These seven disruptive trends will particularly affect the future of retail – as seen from a customer perspective:

1. Customer recognition

Based on their individual preferences, shopping history and contextual features, each single customer will be instantly recognized by retailers and their associates. The modes of recognition are manifold: by discount or loyalty card, via smartphone and personalized app, and yes – even via facial recognition or emotion detection.

Walmart, for example, is working on an emotion AI-like system which seeks to capture shopper sentiment in exactly that short timespan in which the decision to purchase (or not to purchase) is made. The smart engine recognizes several aspects of a shopper’s appearance such as age range or sex, though it does not identify people.    

2. Personal product recommendations

Product recommendation systems are well known online – and most of them still work very poorly. But new powerful, deep-learning AI algorithms are taking this old technology to the next level, both online and offline. Great recommendation technology not only understands what a customer has purchased in the past, but also if they would like products they have never purchased before. 

Whereas just understanding purchase patterns may make a decent shopping list tool, understanding the relevance of new products gives the customer the great reward of discovering cool new stuff, while also helping the retailer’s bottom line by adding items to a customer’s basket. Once a retailer has this technology in place it is then fairly easy to transfer the knowledge to recipes or shopping lists.

3. Personalized offers

Personal product recommendation plus discounts create the next level of personalization: individualized promotions, which solve a huge problem for the industry. Retailers and brands invest more than $500 bn per year worldwide in price promotions which, to a large extent, do not produce a positive ROI. They are distributed to the wrong people with the wrong discounts. 

Artificial intelligence enhances personalized price promotions by analyzing basket data. Consumption behaviour, product preferences, purchase intentions and, last but not least, price sensitivity are detected. Price-optimized and personalized promotions can be delivered on any existing channel, from apps to checkout printer, and are in use at German retailers such as Budni and Edeka, using the AI technology provided by So1 (Segment-of-One). So1’s smart personalized promotions support retailer goals such as increasing revenue, profits and customer loyalty. 

4. Seamless checkout

They’re doing it in China, and they’re doing it in the US: checkout-free shopping. In both countries the systems work quite similarly and fall back on the same type of technology used in self-driving cars, namely sensor fusion, computer vision, camera-based visualization, smart algorithms and deep learning. The transaction becomes an integrated part of the shopping experience and nobody has to wait in line to pay, process and checkout. Just take the products you like and go! 

Alibaba's technology, for example, automatically detects when products are taken from a shelf or display and even when they are returned. Once done shopping, the customer can leave the store and is charged shortly afterwards via the WeChat pay app, which by the way is the best-known “one app serves all” integrated app the world has seen so far.

5. Voice-based shopping

Speech is the basic human means of communication and interaction. Amazon’s Alexa and Google Home, the artificial-intelligence-based personal assistants, are conquering markets worldwide. Walmart and Google have just launched a new partnership to allow customers to shop from among hundreds of thousands of Walmart products just by speaking to the virtual assistant that is integrated into the smart speakers of Google Home and using the Google Express shopping service.

6. Smart products

A feature planned by Walmart and Tesco a couple of years ago, but which never materialized, will see a revival in the near future: individually-tagged products that communicate with each other and the customer. 

Based on the composition of products in the shopping basket, recommendations on recipes, add ons, cross sales or up sales will be printed out or sent to the customer via app during or after the purchase. Intelligent trolleys will be able to identify targeted products, deliver recommendations and lead the customer to the right shelves to facilitate the shopping process and save time.

7. Automated shopping list

Have you heard of “Flipp”, “Big Oven” or “Out of Milk?” There are already some apps out there that are designed to make grocery shopping easier. They can help you find the best deals on weekly grocery essentials, store your updated home pantry inventory for easy reference, or save recipes, organize ingredients into categories and import them to the current shopping list. 

The “all-in-one” shopping app, once personalized, would not only be connected to your fridge, informing you which products are missing or about to run out, it would also know all product details along with your personal food intolerances and send a warning if there are any ingredients that you should be aware of. Fully integrated and individualized – could there be any safer, faster and hassle-free way to shop?    
 
As most of these solutions are already beyond piloting, the only question that remains is this: when will the future of human retail become reality on a broader scale?!

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